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Money Laundering

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zantasha anam

on 12 June 2011

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Transcript of Money Laundering

Money Laundering PRESENTED TO:
PROF. SHAHID MEHMOOD WHAT IS MONEY LAUNDERING? Change the proceed of crime Change the true ownership of proceed Change the proceed of crime Change the true ownership of proceed WHAT IS MONEY LAUNDERING? Background Originated at the time of the famous american gangsters that arose originally out of prohibition - the banning of alcoholic drinks. The major headache that gangsters faced was that the money was in cash, often in small denomination coins. One of which was slot machines, and another of which was laundries - so, it is said, that the term "money laundry" was born Why Study Money Laundering? Governments are now realizing that the
pursuit and confiscation of illegal monies
from crime is as effective a way of attacking
crime as arresting the felons Money laundering leaves many of Banks
and financial institutions open to criminal
prosecution and the subsequent adverse
publicity The study of money laundering as a means to countering crime,
which imposes huge economic resource costs on society and
threatens the proper functioning of the economy Stages of Money Laundry Cash placed in different accounts in
one or more banks whether in one
or more countries Placement Hiding the real source of this money,
separating it from its suspicious source
and giving it a legal and honest cover Layering Ready for investment for it will not be easy
to discover it except by secret investigation
through complicated channels. Integration EDDIE ANTAR CASE Owner of Crazy Eddie's Electronics, skimmed millions of dollars to hide it from the IRS.
Inflate the company's reported assets in preparation for its IPO.
Carried millions of dollars strapped to his body and in his suitcase to Isreal. EFFECTS Socio-cultural Effect Criminal activity actually does pay off.
General loss of morale on the part of legitimate business people who don't break the law and don't make nearly the profits that the criminals do. Economic Effect Developing countries in the process of establishing regulations for their newly privatized financial sectors.
Collapse of Banks
Errors in economic policy resulting from artificially inflated financial sectors. Problems relate to taxation and small-business competition Laundered money is usually untaxed, meaning
the rest of us ultimately have to make up the
loss in tax revenue. Legitimate small businesses can't
compete with money-laundering
front businesses that can afford to
sell a product for cheaper. Methods Structuring Bulk cash
smuggling Cash-intensive Trade-based Shell companies
trusts Bank capture Casinos Real estate Black salaries Often known as "smurfing," it is a method of placement by which cash is broken into smaller deposits of money, used to defeat suspicion of money laundering and to avoid anti-money laundering reporting requirements. Physically smuggling cash to another jurisdiction, where it will deposited in a financial institution, such as an offshore bank with greater bank secrecy or less rigorous money laundering enforcement. A business typically involved in receiving cash will use its accounts to deposit both legitimate and criminally derived cash, claiming all of it as legitimate earnings. Often, the business will have no legitimate activity. Under- or over-valuing invoices in order to disguise the movement of money Trusts and shell companies disguise the true owner of money. Trusts and corporate vehicles, depending on the jurisdiction, need not disclose its true, beneficial, owner. Money launderers or criminals buy a controlling interest in a bank, preferably in a jurisdiction with weak money laundering controls, and then move money through the bank without scrutiny. An individual will walk in to a casino or a horse race track with cash and buy chips, play for a while and then cash in his chips, for which he will be issued a check. The money launderer will then be able to deposit the check into his bank, and claim it as gambling winnings. Real estate may be purchased with illegal proceeds, then sold. The proceeds from the sale appear to outsiders to be legitimate income. criminal proceeds to make up the difference. Companies might have unregistered
employees without a written contract who
are given cash salaries. Black cash might be used to pay them. COMMONLY ADOPTED METHODS IN PAKISTAN Hawala Hundi Two prime money-laundering industries Drug trafficking Terrorist organizations CONTRIBUTIONS AND DONATIONS







SMUGGLING AND TRAFFICKING IN COUNTERFEIT GOODS Legal Sources Illegal Sources ASIF ALI ZARDARI SWISS CASE KHANANI & KALIA CASE Struggle by Pakistan The Control of Narcotic Substances Act of 1997
Pakistan criminalizes Terrorist Financing under the Anti-Terrorism Act 1997
The National Accountability Ordinance of 1999
Pakistan joined the APG in May 2000. Pakistan is a party to the Vienna, Palermo and Terrorist Financing Conventions.
In September 2007 Pakistan issued the Anti-Money Laundering Ordinance,
Anti Money Laundering Act 2010, The Pakistani Government has placed an Anti-Money Laundering Bill 2005 before the national assembly that proposes four-year jail sentences for money laundering Conclusion Government is not the solution to our problem; government is the problem Recommendation 1.Rates of taxes low,
2.Number of taxes reduced, and
3.The tax net broad-based
4.Flat tax system
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